Greek Deal- An Important Event To Check Out

Greek is the burning issue of the past few days Markets from all around the world are closing watching the developments concerning the Greek deal. It will have repercussions on both the sides- up or down on the markets. Euro and USD have discounted the developments on Greek deal in their values periodically. As a trader you should know about the Greek crisis.

Recession in Greece

Greece has been in the recession for the past five years. In the past, Greece has accepted the bailout package and also had agreed to austerity measures. The European countries had asked Greece to bring the reforms. But Greece has failed to bring in the reforms as per the expectations of the creditors. This time European leaders are not willing to give bailout without a commitment from Greece.

Important Payment in March

The proposed bailout will consist of 130 billion Euros. The upcoming payment on debt of 14.5 billion Euros is in March. Without the bailout, Greece will be unable to honor the payments in March. It will have huge repercussions on the financial markets not just in Europe but also on those around the world. It will be a domino effect. Country defaulting on its debt is huge setback for the world economy. A default by Greece will be no different.

Obstacles in front of Greek Politicians

There are genuine concerns of people on both sides of the deal. Greece is going into the elections this April. The bailout will bring with it many difficult measures like tax increase, wage cuts, lay offs etc. With elections coming up shortly, it will be very difficult for the politicians in Greece to accede the demands of the creditors. Many unions in Greece are protesting hard against the austerity measures proposed by the European leaders.

Demand of the Creditors

On other side, leaders from European countries have asked for a stronger commitment by the Greek politicians. The polls in April have worried the creditors. The creditors demand that reforms should be the priority of any government which comes into the power.

Hope Lost with Delay

It is important that the deal is finalized as early as possible. Talks in the past few days have seen some positive developments. But nothing concrete has emerged from the talks. Greece will not be in a position to pay in March if bailout is not offered. Finance ministers from Europe will again meet in the next week when the deal has to be finalized. A political consensus will have to be reached. It is not just an issue limited to financial world.

The last week saw a seesaw of Euro between 1.3200 and 1.3000. Euro broke an important level of 1.3200 on the upside four times on the hope of Greek deal going through. But it was unable to break the resistance of 1.3230. If the deal goes through the single currency can touch the 1.3400 levels. But if the delay continues, the single currency could be seen at 1.2500-2600 levels.